- Last Updated: 3:37 PM, April 1, 2012
- Posted: 10:53 PM, March 31, 2012
Verizon and AT&T received plenty of static this week on their projects for 4G revenues.
Several analysts began downgrading the carriers last week, including Baird Equity’s William Power, who constructed a survey that revealed 36 percent of the respondents who planned to purchase the LTE-enabled version of Apple’s iPad planned to use it daily — a higher number than previous surveys of tablet owners had found.
The survey would suggest that higher data-plan bills may be in the offing, resulting in higher revenues. Despite noting that the majority of the respondents said they would use the connection from AT&T and Verizon daily, Power decided to downgrade the carriers from “Outperform” to “Neutral” for other factors.
“We downgraded AT&T and Verizon based on a combination of ongoing return on invested capital concerns, driven by the tsunami of data traffic, and valuation levels that we viewed as fair. In addition, we expect wireless subscriber growth to slow in Q1 across the industry,” said Power.
Power also pointed to free cash flow for the US’ major carriers, which has barely grown since 2007, all while Apple’s free cash flow has surged from about $6 billion to now more than $40 billion.
RBC Capital analyst Jonathan Atkin also rained on the carriers’ parade, lowering his growth targets. First, he downgraded Verizon to a “Sector Perform,” or neutral, rating, while maintaining a $40 price target on the shares. Atkin left his rating on AT&T unchanged at “Sector Perform,” with a $30 price target.
All the negative attention resulted in Verizon shares tumbling 3 percent, or $1.19, to end the week at $38.23. AT&T ended the week at $31.23, down 1 percent or 29 cents.